2:44 PM Klobuchar Ethanol and biodiesel are near and dear to Minnesota, but I believe this is also an issue of national security. I’m glad the energy bill requires auto manufacturers to have 50% of their vehicles be flexfuel by 2015. Minnesota ranks first in E85 infrastructure.

2:56 PM Karsner An E85 infrastructure should be a goal but not an exclusive goal. We see no technical reason why flexfuel vehicles cannot be more ubiquitous across all markets.

Dorgan Do you think the marketplace will solve this problem?

Karsner I think the question is whether we have the proper stimulus.

Dorgan I’ve talked about the gas company impediments.

Karsner I had lunch with Gov. Pataki. On a state by state basis those issues are being addressed. On E85 we have a need to address it.

Dorgan Franchises are barred from listing E85 on their signs.

Karsner I can’t speak for the position of the franchise owner, but the New York model may be something we need to examine.

Dorgan Conoco Phillips will not allow sales on the primary island. Should we just wait for the states to deal with it?

Karsner The New York example has been tested. I’m not an expert on contract law. Is it an impediment? Obviously, yes.

Dorgan When we see this kind of restraint on the sale of E85, should we act, or say so be it?

Karsner Something needs to be done. Some policy stimulus. I don’t start with the premise that the oil companies are necessarily an adversary to the outcome.

Dorgan It appears to me their actions are adversarial to the sale of E85.

Karsner Were I a franchisee I likely would see it that way.

Dorgan What about as a policy maker? Keep it off the main island, don’t allow credit cards, don’t allow advertising.

Karsner I understand your meaning. Fundamentally you have a conflict between the national imperatives and the law. The problem is that this is private contract which both parties have joined freely with.

Dorgan You seem to suggest the intermediate blends might get faster adoption.

Karsner Intermediate blends goes as low as anything above E10. All pumps are certified for E15. In theory you could aggressively pursue E85 and E15 at the same time.

Dorgan Our goal is 36 billion gallons. If we don’t market it, we won’t get there.

3:22 PM Under questioning from Tester:Karsner It may be that the oil companies’ agreements are not aligned with the national security imperative.

Tester There’s a lot of misinformation out there about ethanol. Is there action on the part of the DOE to solve that problem?